1. Field of the Invention
The present invention relates generally to systems and methods for providing online services. More particularly, the present invention relates to a online trading system that allows users to open accounts in “real time”, i.e. the account is opened while the user waits, and the user is able to perform trading operations immediately after the account is opened.
2. Description of the Related Art
The stock market allows individuals to buy and sell ownership interests in publicly traded corporations. Such ownership interests may be traded through trading of shares of company stock, trading of options on a stock, and/or trading of holding companies or mutual funds that own a portion of the company.
The advent of online trading has made it convenient for individual investors to participate in the stock market, and consumer response to the availability of online trading has been phenomenal. In 1999 alone, the number of online brokerage accounts grew by over 100%, so that by the end of 1999 there were well over 10 million online brokerage accounts. The increased number of investors and increased trading volume has encouraged many brokerages to compete for market share by reducing trading costs. Of course, brokerages can only handle greater volumes at reduced costs by improving the efficiency of their processes.
One of the processes that would benefit the brokerage is the process for opening new accounts. The traditional process requires interested people to (1) call to request an application; (2) wait for the application to be mailed to them; (3) fill out and sign the application; (4) provide funding information or a write a check; (5) mail the completed application to the brokerage; (6) wait for the account to be opened; and (7) wait for the account access information to be mailed. This process takes an average of 3 weeks to complete, and costs the brokerage roughly $25 per application in time and processing expenses. The “abort” rate (customer decides not to complete the account opening process) ranges as high as 80%.
A recent improvement in the process for opening accounts is the “Online Application”. In the Online Application process, interested people can locate and electronically fill out an application form on their computers, thereby bypassing steps (1) and (2) above. The brokerage also retained the application in electronic form, so step (6) also required less time. However, because the law requires a signature, people still had to print out, sign, and mail the applications. The Online Application process takes an average of five days to complete, and costs the brokerage roughly $12 per application in time and processing expenses.
Often, people are motivated to open a brokerage account because they have an investment idea they want to pursue. However, three weeks, or even three days, seems an eternity to people in this modern age of fast service and instant gratification. Thus the brokerages are frustrating the desires of their potential customers even before the first trade is placed. Accordingly, it would be desirable to provide a system by which investors could open trading accounts in real-time, and begin investing immediately once the account has opened. Such a system would preferably isolate the potential investor as much as possible from the commercial difficulties of Securities Exchange Commission (SEC) regulations, account administration, funds transfer, and fraud prevention, thereby making the investors first experiences as pleasant as possible.